Service Centric Biz Model China Final English

IBM Global Business Services
Transforming to a Service
Centric Business Model:
The Path to Sustainable Growth for
Chinese Enterprises
March 2009
Copyright IBM Corporation 2006
Acknowledgements
Authors
Project Advisors
Michelle Kam, IBV China Research

Director
Chee Hew, Managing Consultant, IBV
Li Zhi, Senior Consultant, IBV
Yi Wei Jiang, Consultant, IBV
Steven Davidson, AP S&C Leader

Xu Yonghua, GCG S&C Leader
Andrew Davidson, Americas S&C
Managing Consultant
Acknowledgments
Mary Keeling, Managing Consultant, IBV
Ireland
Luo Yi, Consultant Trainee, S&C
Executive summary
The global financial crisis is making it even more urgent for Chinese manufacturers to
seek sustainable paths for growth. Product to service transformation is a viable strategy
for Chinese companies and those who make the transformation successfully will be in
better position to survive the crisis and be positioned in the longer term
There are two major opportunities to move from product to services focused: product
and non product related
Offering value added services (VAS) around products is the most realistic path to
enhance value in the next few years. Chinese companies can identify VAS opportunities
by taking a customer centric perspective how to resolve key issues around product
usage and ownership
The key to successful product to service transformation is to have a differentiated
business model. Chinese companies also need to align their operational model and
build up strong people capabilities
As Chinese companies gain additional experience and expertise, they can move to
offering service led solutions, offering increased customer value
Key Messages
Service driven transformation provides path to differentiation and
sustainable growth
There are two paths to achieve the ultimate goal of offering services led solutions
- Product related value added services presents high potential for majority of
Chinese manufacturers to increase value by improving product ownership
experience
- Selected manufacturers with strong functional and/or operational excellence can
offer non product related services
Services led solutions offer comprehensive products and services that meet
clients needs and require increased level of complexity and integration
Chinese manufacturers need to address three key components to become more
service oriented: 1) differentiated strategic model 2) aligned operational model, and 3)
people & culture
Three factors drive Chinese manufacturers to transform from

product to service centric
Global financial crisis has shrunk
global and domestic demand,
worsening profitability of Chinese
manufacturers
Declining
profitability
Consumer
heightened
demand
Customers want better

experience of using the product
and solutions to their problem
5
Strong renminbi (RMB) and rise of

raw material costs are further eroding
the profit margin
Commoditized
product
Lack of product differentiation

among manufacturers, resulting
in low customer loyalty
Reductions in global and domestic demand from the current economic

crisis has further threatened the already paper thin profit margins of
Chinese manufacturers
Performance of Chinas Top 500 Companies in 2007
Export orders has decreased

30% in 2008 in Wenzhou, 30%
firms will close down and the
number will increase to 40% by
April 2009 - Mr Dewen Zhou,
16%
Manufacturing
Service
14%
President of Wenzhou Association of

Small and Medium Enterprise
reported in the 2009 China Small and
Medium Summit
P ro f it M a rg in
12%
10%
Most manufacturing
companies have low
profitability with profit
margin under 5%
8%
6%
4%
Black Metal
Mining &
Processing
Automobile
2%
Communication
Equipment
0%
0
20
Electronic
Household
Appliance
40
60
Construction
80
100
120
140
160
180
200
A recent survey by the China

5% Cotton Textile Association
found that 49.2 percent of firms
in 17 Chinese provinces were
considering shutting down, and
44.4 percent were trying to sell
export-oriented products on the
domestic market
Operating Revenue (RMB billion)

Source: CEC-CEDA China Top 500, http://www.cec-ceda.org.cn/c500/chinese/ ; IBV analysis
Consumers are becoming more demanding, looking for more

individualized and total solution services when making purchases
Consumers regard service as a key purchasing
criteria in Consumer Electronics industry
White goods
Black goods
Consumers are becoming more

informed and demanding:
Cell phone
82
83
Product performance
Look for customized products tailored

to my specific demand
89
80
84
84
Service
Look for services along the full

purchase cycle to provide more
convenient and comfortable user
experience
69
Presence In channels
73
69
For instance, an Ipod is not just a cellphone. It

provides non-stop entertainment and other
accessory services (enabled by the
entertainment and other software download
services)
68
70
71
Brand
67
68
66
Price
Look for total solution services

instead of individual products
45
Recommendation
49
45
0
10
20
30
40
50
60
70
80
90
100
For instance, consumers look for companies to

provide consultation on how to design kitchen
and which appliances will best meet needs
instead of just selling individual appliances such
as stove, fridge etc.
Source: IBV 2008 Consumer Survey on China Consumer Electronics, IBV China analysis
7
Commoditized products offer minimal product differentiation,

making it difficult to provide an unique value proposition to lock in
customers
Example of Commoditized Products in Chinas Handset Industry
Commoditization of
product
The commoditization of device is increasing and getting worse

due to commoditization of cell phone chip developed by mobile
phone chip makers, fewer and fewer Chinese cell phone makers
are willing to take efforts on Price wars have become the main
trait in this era
Wu Ping, CEO, Spreadtrum
2008 Spreadtrum China Telecommunication Industry Forum*
Poor value proposition

cannot lock in
consumers
It is time to change!
The new functions like color screen lack true differentiation and it
is becoming increasingly difficult to attract and lock in consumers.
Consumers now have higher expectations on mobile features and
they require truly differentiated and unique cell phone to meet
their personalized demands
Zhang Zhengyu, CEO, Hitech Wealth*
Chinese cell phone manufacturers need to change their mindset
and transform themselves from cell phone maker to consumer
service provider, competing based on product differentiation
Xu Yong, Managing Analyst, Gartner
Note: Spreadtrum and Hitech Wealth are local handset manufacturers

8
Global players are ahead of Chinese manufacturers, having started

the service transformation since late 1980s
Facing escalating growth challenges, GE started to transform from product to services since late 1980s
and pursued growth from financial, information and product services
For instance, GE Aircraft Engines (GEAE) launched Power by the Hour model where they charge not for
the engine itself, but for actual usage. It reduces customers pressure to accurately determine upfront how
many spare engines to purchase. For those who prefer to own the engines, GEAE also offers spares
insurance, guaranteeing that a replacement can be delivered to any airport within 24 hours. GEAE thus
won comprehensive engines service contracts and solidified its role in customers value chains by offering
real value for its customers

The transformation has been profitable: GE outperformed average S&P performance by 4 times, with
services contributing 70% of total revenues
Our vision for the next century is a GE that is a global service company that also sells highJack Welch, Chairman & CEO, GE Corporation (1996)
quality products.
Facing declining profit margins and intensifying competition, Nokia started to transform towards higher
value-added internet services since 2000. Transformation activities include offering increased value added
internet services, making acquisitions to gain internet service solutions, making internal organization and
culture change
Nokia launched a series of services including on line game download services and on line music download
services. To better emphasize on services , Nokia introduced OVI in 2007the new Nokia internet
services brand
Nokia was able to lock in consumers, achieving a market share of more than 30% globally and profit
margin of over 20% while other players suffered from loss
In 2007, Nokia officially positioned itself as internet company. Nokia will now focus on providing
comprehensive mobile internet lifestyle to customers
Nokia Vice President, , 2006
Source: Product provider to customer value provider: Escaping the service maze, IBV global
9
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Nokia annual report, 2006, 2007 , IBM IBV analysis
Compared to peers globally, Chinese manufacturers have much

lower focus in services
Focus of Manufacturing Firms by Country
Manufacturing
Combined
service
Percentage of Firms
100
90
80
70
60
50
40
30
20
10
0
China
Japan
Indonesia
France
Thailand
Australia
UK
Germany
Malaysia
Finland
US
Chinese manufacturing firms have the lowest levels of servitization, with 97.8% of
firms in China being exclusively manufacturing oriented
Note: The study evaluated publicly listed manufacturing firms in each country and classified each firm as pure manufacturing, service firm or combination
Source: Neely, 2007, The servitization of manufacturing: An analysis of global trends
10
Key Messages
Service driven transformation provides path to differentiation and sustainable
growth
There are two paths to achieve the ultimate goal of offering services led
solutions
experience
service oriented: 1) differentiated strategic model 2) aligned operational model,
and 3) people & culture
11
Transforming from product to service centric requires fundamental

change in how Chinese companies provide value to customers
Product Centric
Service Centric
Sell products
Sell services in addition to product, or sell

a solution
Must have services
Innovative and differentiated service
One-off transaction and revenue
Long term, continuous revenue stream

through customer lifecycle management
Compete on price, product features

and brand perception
Compete on service innovation/ quality in

addition to traditional dimensions
A partial view to meet customers

needs & requirements
Have a holistic view to meet customers

needs & requirements
Limited customer interaction once the

product is sold
Greater customer intimacy as interact

throughout entire product lifecycle and
integrate with customer business/lifestyle
Source: IBV analysis, 2008

12
There are two paths to achieve the ultimate goal of offering services led
solution, with product related services being the more feasible option for
Chinese companies in the short term
Potential Value to
Customers
Most Chinese companies
will move through this path
to leverage strong
manufacturing base and
ease of implementation
Product related value added

services
Launch and manage differentiated
offerings to enhance full product
ownership experience, whereby
customers have higher preference for
products and/or willing to pay for
added value brought about by service
(either separately or together for
product service bundle)
Non product related services

Launch new pure services to new
and/or existing customers
leveraging operational strengths e.g.
outsourcing
Service Led Solutions:

Meet unique needs of
customers through business
ecosystem and making
substantial changes to
business model
Selected Chinese companies

with strong operational/
functional excellence can
pursue this route concurrently
or by spinning off business
Product Focused:
Provide commoditized
services centered around
product usage and product
failure
Degree of change to business model
Low
13
High
Key Messages
growth
experience
service oriented: 1) differentiated strategic model 2) aligned operational model,
14
Companies can identify product related value added services opportunities

through understanding customers key concerns throughout the product
acquisition and ownership life cycle
Value
Chain
Customer
needs/
concerns
Supply
Chain
Popular products
are often out of
stock
Inventory costs
are too high
Shortage of key
parts lead to long
downtime
Pre Sales
Lack of
knowledge or
uncertain about
the function and
quality of
products sold
Off the shelf
products do not
meet specific
needs
Sales
Need cost
effective way of
completing
transactions
Lack of
sufficient
finances to
acquire major
purchase
(Retailer) Need
to create higher
demand
Real-time
replenishment
Service
Opportunity
15
Parts logistics
Customer
experience
center
Vendor managed
inventory
Personalization
service
Source:
IBV analysis, 2008
|
Post Sales
Concerned about
potential downtime
during product failure
Desire to reduce costs
in maintaining in-house
repair/maintenance
team
Desire to have
updated/new versions
of products at low costs
Product lagging behind
in fashion/ technology
Financing/ leasing
Warranty management
services
Upgrade service
E-procurement services
Category
Remote monitoring and
management
diagnosis
& in store promotion
Goods recycling
for retailers
Product Related: Supply Chain
Manufacturers could provide supply chain services to their downstream

business customers to help reduce costs and better serve end customers
Potential Service Opportunities
Real-time
replenishment
Real time replenishment through data sharing to help downstream

business partners (for example, retailers) improve product
availability and hence enhance consumer satisfaction
Parts
management
Shorten repair and down time by automating parts ordering, real

time logistics services and allowing data sharing and
collaboration
Vendor
Managed
Inventory
Manage the raw material and parts inventory for downstream

customers to help reduce inventory cost , shorten parts order
fulfillment time thereby shortening the product order cycle

16
Product Related: Supply Chain
ChangAn Auto Group provides optimized logistics service to

downstream partners in its supply chain
Drivers to transform
In China domestic auto industry, average logistics
cost accounts for more than 15% of total
manufacturing cost, while in Japan its only 5%.
ChangAn Auto Group needed to optimize logistics to
increase profit margin
Changans distributors/ retailers found it difficult to get
vehicle produced on time and monitoring the car
ordering status was too complicated, impacting
vehicle sales
Target customer
Auto distributors
New services/ solution introduced

Founded subsidiary company Changan Minsheng APLL
Logistics Co (CMAL) to provide logistics service for
distributors/retailers:
Enhanced service quality by door-to-door service, including
order resource management, storage yard management,
transportation service, visible on-passage monitoring, etc
Expedited the process of car collection by leveraging
advanced technology, e.g. Bar Code, Global Positioning
System and Electronic Data Interchange
Reduced transport cycle by optimizing transportation route
with highway, railway and waterway alternatives
Value proposition
Distributors/retailers are able to be more efficient in car
collection and responsive to demand shifts in the market
Outcomes/ Benefits
For distributors/retailers, optimized supply chain reduce transportation
time, increase their satisfaction with service quality & simplification to
allow them to focus on promoting sales
For ChangAn Group, reorganized unit decrease inventory costs by
RMB 21 million, transportation costs by 28 million and labor costs by
2Million annually
,, , 2006-3-10; ,2007-12-02; IBV analysis
Source:
17
Product Related: Pre-sales & Sales
Chinese manufacturers can offer value added services in presales and sales stages to promote sale of its products
Customer
experience center
Personalization
service
Financial &
Leasing Services
Provide customer a platform to experience using product,

contributing feedback on services and products to further
enhance product ownership experience
Fulfill needs of top customers who have highest demands
and willing to pay premium for individualized products that
meet their specific needs
Provides attractive financial options and purchase
planning to resolve issue of insufficient funds to
purchase larger items
E-procurement
services
Provide online services e.g. customized web portal offering

individual customers to check product offerings, track historical
transactions, delivery and payment status, allowing effective
management of procurement
Category
management & in
store promotion
(for retailers)
Define category strategies based on consumer needs and work

with retailer to maximize profitability and sales by determining
appropriate product categories, optimal price, promotion tactics
and product placement

18
Product Related: Pre-sales
Increasing customization can meet customer requirements, bringing about

product differentiation and increased revenue opportunities
Degree ofDegree
customer
of customer
integration
integration
model
Match-to-order/
locate-to-order
Model of
Customization
Selection of
existing (standard)
products or
services according
to customer
requirements
Bundling of existing
products/services to
customer-specific
requirements, typically
at slightly discounted
price
Assemble-to-order
Assembling of
products/services from
standardized
components/process
blocks
Cover more customer segments and increase switching costs of

customer to increase sales volume
Benefit
Engineer-to-order
Customer co-design
Service
product/service through
in-depth consultation Opportunity
service, followed by
customized made-toorder product
Target VIP customers

who has most critical
demand and willing to
pay premium
Engineer to order is considered a value added manufacturing

practice as it provides the highest degree of customisation through
individual consultation to address specific needs

19
Bundle-to-order
Product Related: Pre-sales
SoVital combined consultative services with make-to-order highly

personalized products, winning in the highly competitive health wellness
market
Background & Drivers to transform
A German company that offers consumer health
products such as vitamins and minerals, SoVital
encountered intensive challenges from competitors.
It noticed an emerging trend where customers were
tired of taking numerous pills daily and were looking
for more individualized treatment
Target customer
VIP customers who demand personalized and
healthcare service and food auxiliary products

SoVital introduced a new service offering called
MyMix whereby customers fill up a specific
questionnaire through the internet or face to face
pharmacy consultation. SoVital then produces
highly individualized pills of vitamins and minerals
upon consideration of the individuals health
requirements and personal nutrition habits.
Value proposition
Enjoy more effective healthcare service by
individualized pharmacy consultant and customized
treatment. Customers find convenience in taking one
vs. numerous pills
Outcomes/ Benefits
By addressing the increasing desire for individualized
treatment, SoVital succeeded against competitors in the
growing health wellness market. The company was also
able to capture the high end customer segment at more
profitable margins.
20
Source: Mass Customization in Process Industries, Prof. Dr.-Ing. habil. Hans-Jrg Bullinger, Dr.-Ing. Wolfgang Schweizer, 2007
|
Product Related: Sales
Offering financing solutions to customers could bring benefit to a wide

range of industries; the auto industry illustrates the potential of doing so
Financing Opportunities in Chinas Auto Industry
Auto Financing
in China
Market
penetration
Scope
Financing
options
10-15%
Opportunities
Can increase to
70-80% (Europe
& US level)
End consumers
account for
only 30% of
business
volume, rest
targeted
towards
distributors
Expand end
consumer market
Provide more
comprehensive
services e.g.
insurance & leasing
Higher interest
rate than bank
loans
Offer more
attractive financing
deals, e.g. zero
interest and flexible
repayment plan
Ford has doubled its

financial services business
in China, helping to build
customer loyalty
As of 2007, 40% of a total 170 distributors

offer loans to individual consumers. The aim is
for 80% of distributors to provide individual
auto loans in the near future.
Fords financial services doubled in 2007, from

5000 cars in 2006 to 10000 in 2007.
This service has helped Ford build customer

loyalty, especially in the Western part of China,
where consumers are buying cars for second
or third time.
In particular, 60% of
S-MAX sales was
achieved through
Ford financing
services
,, 2008.8.15; , ,2008.7.17;
1000 ,China Auto News, 2007.8.15
Source: www.fordcredit.com;.
7
21
Product Related: Sales
Whirlpool provided top-notch service to members of its selling chain and

cuts per-order costs significantly with its online trading portal

Introduced innovative enterprise model to provide business-tobusiness (B2B) trading partner portal that enables business
partners (e.g. retailers) to order online. Through the Whirlpool
Web World portal, the company allowed trade partners to
place orders from a full and constantly updated virtual
catalogue of the Whirlpool family of home appliances, track
delivery from factory floor to their stores' floors, check billing,
and submit credit inquiries. These and other services are
available 24/7
As the worlds leading manufacturer of major home

appliances, Whirlpool had a huge base of middle-tier
trade partnerswhich comprised 25 percent of its
total partner base. Without connection systems,
partners found it inefficient (in time and costs) in
placing orders, typically had to submit orders by
phone or fax.
Target customer
Value proposition
Middle-tier trade partners
Partners are able to be more efficient in placing orders

and tracking product delivery. They are also able to
preserve transaction data for accounting purposes
Outcomes/ Benefits
Able to lock in trade partners by offering differentiated service.
Within a three-month period, the portal service helped
Whirlpool to generate $100 million in revenue.
The trading portal cut the cost per order to under $5--a saving
of at least 80 percent.
Source: IBM reference, http://www-07.ibm.com/hk/e-business/case_studies/manufacturing/whirlpool.html, IBV analysis
22
Product Related: Post-sales
Chinese manufacturers can offer value added services in post sales

to promote product ownership experience and longer term
customer loyalty
Warranty
management
Upgrade service
Remote
monitoring and
diagnosis
Goods recycling
Provide reliable product access and usage to customers through

sales of extended warranties and related products
Provide upgrade services of new versions/models in addition to
applications and software update services to ensure customer has
latest version of products
Improve product reliability and reduce downtime of product by
remotely monitoring and diagnosing of problems
Launch the goods recycling program (for e.g. old for new
program, second-hand goods recycling and selling , etc) to
provide customer care and services throughout the entire
product life cycle and environmental friendly disposal

23
Product Related: Post-sales
Volvo provided comprehensive safety services, such as safety

driving assistance services to enhance safe brand image
Consumers are increasingly concerned on safety,
not only in product but also during actual driving
experience
Target customer
Customers who value safety as an important
criteria in automotive purchasing and driving
experience
Outcomes/ Benefits
By enhancing the remote tracking and conducting
serial of safety driving assistance services, Volvo
successfully built a very unique position and image
of offering a safe driving experience among its
peers, successfully locking in consumers

Volvo enhanced the remote tracking system and
provided a series of safety driving assistance
services
Automatic SOS function in the event of an accident:
Volvo operator collects a whole range of
information simultaneously e.g. the condition and
position of the vehicle, door locking, amount of fuel
in the fuel tank to provide appropriate and real time
assistance
Provides breakdown assistance, available 24 hours
a day and accessible by directly pressing the Volvo
On Call button
Vehicle tracking system in the event of theft.
Driver Alert: a warning system for tired drivers
Value proposition
Consumers enjoy a total experience of feeling
safe; not only in purchasing a safe product but
also in experiencing comprehensive post sale
services when driving the vehicle
Source: Worldauto , 2006

24
Key Messages
growth
experience
- Selected manufacturers with strong functional and/or operational excellence
can offer non product related services
service oriented: 1) differentiated business model 2) aligned operational model,
25
Selected Chinese manufacturers can consider non product professional

services by leveraging operational strengths in value chain and business
admin functions
Business Admin Function
Value
Chain
Customer
needs/
concerns
R&D
Many
manufacturers
lack resources
and expertise to
conduct cutting
edge
development
Product design
needs to be
improved and
validated
Service
Opportunity
Application/
transformation
of technology
Design service
Trial production
testing
26
Supply
Chain
Small companies
lack skills &
bargaining power in
non strategic
procurement
Inefficiency in supply
chain for instance in
logistics
Procurement
outsourcing
Logistics
professional
services
Reverse Logistics
Sales &
Post sales
Seek increased
costs savings and
reduction of down
time
High costs in
building and
maintaining sales
distribution
channels and sales
force
Brand
neutral
maintenance
service
Sales agent
service
Lack in-house
expertise in setting
up/maintaining IT
infrastructure/applicat
ions/data
Inefficient and costly
to manage non core
operations for
instance HR and call
centers
IT outsourcing
HR outsourcing
Call center
outsourcing
Non product related service : Supply chain
For instance, Chinese manufacturers can leverage own supply

chain operations to provide third-party services in selected areas of
the supply chain
Procurement
Procurement
service
Logistics
Logistics
professional
services
Provide professional
procurement services e.g. Serve partners or
other manufacturers
supplier identification,
who wish to
supplier selection, order
outsource their
placing for other
logistics functions,
manufacturers on typically
leveraging existing
commoditized products
logistics networks
procurement by
and logistics
leveraging existing
management
supplier networks and
experience
supplier management
experience
Reverse logistics
Reverse logistics
Provide proficient
reverse logistics
service to other
manufacturers to
allows quick,
efficient and costeffective collection
and return of
merchandise

27
Non product related service: Supply chain
Haier Group reduced supply chain operation costs by 10-25%

and generated significant revenues through providing
logistics services to other manufacturers
To penetrate into additional city markets in
China, Haier had to build an extensive logistics
network across China. This, however, created
increasing cost pressures for Haier.
At the same time, Haier had to conduct the
logistics activities by themselves due to lack of
qualified 3rd party logistics service providers
Considering the increasing market demand for
the 3rd party logistics services in China, Haier
decided to leverage its existing experience and
network to provide 3PL services

Routine logistics services : Shipping, distribution
services, transportation, clearance services etc
Logistics management services: Warehouse
management, Vendor managed inventory, Point
KPI management
Logistics strategy services: Logistics strategy
Logistics planning, logistics optimization
Value proposition
Target customer
Business customers in 6 major industries: Auto,
IT, telecom, Fast moving consumer goods,
electronics, Retail.
Outcomes/ Benefits
Decreased procurement costs 6%, warehouse space 90%,
logistics costs 10-15%, saving internal supply chain
operation costs by 10%-25%
Haier Logistics is ranked as one of the Top 10 3rd Party
logistics provider in China and high profile clients include
GE, P&G. IKEA, SGMW (Shanghai GM-Wuling), DOW etc.
Customers enjoy cost effective, just in time

logistics services, reducing total operation costs by
10-25%. Customers were also able to redesign
their logistics strategy and optimized their logistics
management
Source: The 6th Survey Report on China Logistics Supply and Demand, China Association of Warehouse and Storage, 2005
28
Non product related service: Sales
Chinese manufacturers can also leverage its own sales and postsales resources to serve customers on third party basis
Brand-neutral
HR service
maintenance
service
Sales Agent
Service
Provide one-stop maintenance service that is brandneutral (i.e. not only own but other products) to
customers (enterprises or consumers) who have
acquired various equipments from different vendors
Leverage internal sales and distribution channels to sell
other manufacturers products.
For instance, Lenovo leveraged its strong distribution
channel to help Lexmark, the second largest international
printer maker, sell inkjet printers. As a result of the
business transfer, Lexmark concentrated on core
business capability, including product manufacturing and
warranty management.
Sales & post sales resources such as existing channels, postsale services can be leveraged for third party services. However,
efforts should be made to avoid internal sales conflicts
Source:
,, , 2006-10-16; IBV analysis
29
IBM Global Business ServicesNon product related service: Business support services
There is large potential for professional business support

service to develop in China
We define business support service as managing and operating the non core service of another company .
This may involve taking up the companys existing assets and staff intended for providing such non core
services. Benefits to customers include lower cost through economies of scale, no investments required for
facilities, headcounts and training, and scalable services to support business growth.

Call center
Call Center
outsourcing
service
service
HRHR
outsourcing
service
service
IT outsourcing
service
Manage call center functions such as in and outbound call service,

training sales staff, supervising sales and legal, administrating technical
infrastructure & telephone network, thereby removing management and
fixed costs associated with call center investment & operation
Manage back-office functions such as payroll, benefits, tax
administration, risk management, recruiting and training
Manage IT function such as infrastructure & application outsourcing, data

hosting & management allowing smaller cost in setting up and maintaining
infrastructure, applications and data
Source: Gartner (IT Service); Equaterra (HR outsourcing); http://www.chnsourcing.com/article/news/2/237920080728140402.html Hewitt Associates website
;IBV analysis, 2008
30
IBM Global Business ServicesNon product related service: Business support services
FAW-Qi Ming has moved from an internal support function to

become a leading third-party IT service provider in China
Founded in Oct 2000, FAW-Qi Ming was formerly the

IT department within FAW. It now provides software,
product and service for auto industry.
FAW Qi Ming recognized the emerging demands for
information service in the rapidly growing automobile
industry
Target customer
Primarily FAW Group and other automobile
manufacturers, as well as manufacturers in other
industries
Provide comprehensive information technology service to

support customers business operations:
Offer information technology service, e.g. information
management consulting, information system outsourcing
and technology training.
Offer GPS real-time monitoring service for over 150
business customers who need to track logistic delivery
status
Offer a third-party online procurement platform, serving
6853 suppliers and clients;
Value proposition
Allow customers to have effective business
operations that utilizes advanced & leading
technology and qualified technical services, without
having to make heavy investments in technology
infrastructure and administration
Outcomes/ Benefits
Ranked as top 30 largest independent software development companies
in China and rated as the top 10 innovative Chinese software enterprises
in 2006, 2007, 2008
The profit in FY2007 is RMB46.84 million, around 65% of which is gained
from external customers.
,2007,
Copyright IBM Corporation
2006

, 2008
Source:
IT
-, 2008, http://www.qianjia.com/html/2008-03/39076.html;
31
|
shttp://www.cnr.cn/jlfw/cyzh/200711/t20071105_504611651.html;2008
,
Offering product related value added services is a more viable

option for majority of Chinese companies, compared to non product
services
In summary, product value added services is appropriate for Chinese
companies as it enhances value to customers by improving product ownership
experience, allowing manufacturers to move to higher value business
Few companies in China currently have the critical mass or operational
capabilities to offer non product services effectively
-
Prerequisites typically include having strong internal operations that are big enough
to enjoy economies of scale
Most Chinese companies are now focusing on improving internal operations
They will need to first raise it to effective levels e.g. shared services, before moving it
from a cost center to profit center
Chinese companies will need to increase capabilities and maturity in offering

services, to eventually move to services led solutions
32
Key Messages
growth
experience
Services led solutions offer comprehensive products and services that

meet clients needs and require increased level of complexity and
integration
service oriented: 1) differentiated business model 2) aligned operational model,
33
Service led solutions address the underlying, real needs of

customers and excavate further hidden needs
Illustrative Example
Hierarchy
of customer
needs
Perceived needs
Real needs
Further hidden needs
(addressing the underlying

reason for buying the product)
(Offering additional value by

excavating further hidden needs
which the customer has not
realized before)
Maximise value of the data through
integrating heterogeneous data into
uniform view and format
Enterprise information integration
service
Customer
needs
High performance
data storage media
Reliable, secure way to store and

manage enormous amount of data
Offerings
Storage products
Data centre hosting service
Service led solutions attempt to address the underlying and further hidden reasons of customers
acquiring individual products/services, which customers may or may not be aware of, or currently
trying to solve the problem themselves through using a combination of different products and
services provided inhouse and/or by various vendors
The solutions can integrate additional products/services to address customers potential
broader/deeper concerns and provide additional value with dynamic capability to solve various further
hidden needs
34
Service led solutions involve a new approach to product/

service provision
Ownership of the product is no longer relevant the key is customers can have access to the
functions delivered by the product on demand
The solution provider plays an important role of selecting, acquiring and integrating products and
services to address customers real needs, and customers primarily care about the outcomes of
the solution (i.e. whether their problems are solved to their satisfaction, rather than how the
problems are solved)
Service led solutions may require fundamental changes to business and operating models, e.g.
new approach to the sales contract and performance measures, new forms of partnership for
customer access and delivery, and new pricing models, etc.
As a result, service revenue becomes increasingly important and major component of total
revenue
In the short term, we believe that value added services is a fast and effective way for most
Chinese manufacturers to solve the immediate need to gain competitiveness. As providing
services led solutions involves higher risks due to changes to business model, Chinese
companies will need to develop the capabilities and experience while testing customers
acceptance of the new business model
35
Case study 1: General Electric
GE was driven to move towards becoming a service business in the

late 1980s
Declining profitability in
US manufacturing
industries
Profit
margin
Profit marginofof
manufacturing
manufacturingindustries
industries
declining
in
US,
declining in US,with
with
underperformance
underperformanceofof
more
morethan
thantwo-thirds
two-thirdsofof
industrial
companies
industrial companies
80%
80%ofofGEs
GEsbusiness
business
was
in
manufacturing
was in manufacturing
industries
industries
Intense competition from

Japanese manufacturers
Competition
from
Competition from
was intensifying, as they
was intensifying, as they
provided
providedgood
goodquality
qualitybut
but
at much more competitive
at much more competitive
prices
prices
GEs competency
GE
GErealized
realizedits
itscore
core
competency
was
competency wasininits
its
advanced research skills
advanced research skills
but
butnot
notininlabor
laborintensive
intensive
manufacturing
manufacturing
A service led company

Leveraged its competency and expertise to provide total solution to customers, creating higher
value creation and customer satisfaction
Source: Robert Slater: Jack Welch and the GE way : Management Insights and Leadership Secrets of the Legendary CEO ,
36
GE now offers service led solutions in many of its core

businesses
Vertical transformation to provide
product and service bundling solutions
Appliance & CE
A NEW GE after transformation

newservice-driven
service-driven
AAnew
businessecosystem
ecosystem
business
providingprofessional
professional
providing
servicesand
andproduct
product
services
embeddedtotal
total
embedded
solutionstotoconsumers
consumers
solutions
andbusiness
business
and
Aviation
Warranty extension,
upgrade service etc
Charge by hour service
Oil&Gas
Healthcare
Drilling, production, LNG,

transportation, pipeline
integration etc
medical technologies ,
maintenance, training,
system integration etc
Energy
offers services in support
of power generating and
transmission and
distribution equipment
Water
cooling water solutions,,
water recovery to boiler
water solutions, etc
Security
Provide customized security solutions by integrating new
security technologies with existing equipment and IT
systems
Before Transformation: Equipment Focused

Appliance
Security
Energy
Oil&Gas
37
CE
Aviation
Healthcare
Water
Horizontal moves to new

service industries
FinancialBusiness
Media&
Entertainment
FinancialCustomer
Rail
GE healthcare serves as a good example of this

transformation
Professional services
Total Solution
Education service: provide customers with the

knowledge and skills to optimize equipment usage,
clinical practice and patient care
Financing services: provide customers with

equipment purchase financing plan, even help
customer corporate financing
Product related services
A customer focused problem solving:

Integrate variety of services with
equipment to allow hospitals clients to
improve clinical practice and patient care
Integrated Care Solutions

Provide clinics and hospitals an overview
consultancy of the technology, layouts and
business metrics relating to specific care areas.
Series of medical technologies

services to support clinics and
hospitals better serve patient
e.g. GE patient information center provide
consultancy service regarding forthcoming
diagnostic examination.
Healthcare Equipment
System integration:
Equipment purchase
planning
Provide customized system integration

services that best fits clinical needs and
budget
Performance management:
Equipment/
Technology
Maintenance
Leverage GEs expertise to

provide performance management
services to customer including, six
sigma, leadership system
Culture-driven performance etc
Source: GE Global website

38
This transformation required multi-dimensional changes in

process, culture and organization in the past decades
Intensity of Change
04-Present
Lean Six Sigma
High
E-Business
99-03
95-96
96
Making Customer Winners

Key strategy initiatives
94-96
92
Six Sigma
Productivity , Globalization
Change acceleration process

Increase success and accelerate change
92
91
89
Process mapping
Productivity /Best practices:
Bullet train approach
Benchmarking-Looking outside GE
To improve productivity and shoot for big change
Work-out/Town meetings
Team-based problem solving
Low
Process improvement
All about Changing Mindsets &

Changing Culture
1989
39
Present
Source: Robert Slater The GE Way Field book: Jack Welch's Battle Plan for Corporate Revolution
|
Case study 2: IBM
IBM has a long history of renewing itself in response to shifts

markets, technology, customers and competitors
IBMs Revolutionary History

Accounting
Machines
40
The First
Mainframe
Personal
Computers
The Services
Transformation
On-Demand
Solutions &
Delivery
Case study 2: IBM
Market trends indicated that the future of the computer industry

needed to move beyond hardware and software
Market trends indicated the need
for computer industry to move
beyond hardware and software
Erosion of margins in core markets
Hardware and related services
became commodity with strong
competition
Trend to large and complex
business solutions
Customer demand for integration
tired of unique, stand-alone
technologies yet majority of product
providers provide stand-alone,
disconnected offerings
41
IBM also faced internal

management issues
3 years of consecutive
financial losses
Unpredictable revenue and
unacceptable margins from
service contracts
Service portfolio did not reflect
the needs of the marketplace
Limited and often inaccurate
knowledge of the customer
Case study 2: IBM
A key element of the transformation was to offer integrated

solutions, providing higher value to customers
Solution Definition
Routes to Market
Executive Officers
(CEO, COO, CFO)
Services Led
Solutions
Line of Business
General Manager
Product Related Value

Added Services /
Non-Product Related
Services
Products
Focused
Key Customer
Needs
Value IBM
Delivers
Resolve business problems directly

impacting the value drivers of the business
Revenue growth, margin reduction,
working capital reduction, capex
management, etc.
Refocusing on core business through
outsourcing of application &
infrastructure
Purchasing/Finance Provide information regarding solution

delivery in a format that customers existing
processes can easily integrate; Financing &
Renting service
Resolve specific technical problems related
IT Management
to IT features/performance, reliability, or
cost, e.g. Network management, recovery
and SOA service
Resolve specific problems related to
End User
individual productivity, e.g. desktop
management service
Business
Value
Infrastructure
Value
Component
Value
Source: IBM GBS analysis

42
Case study 2: IBM
IBM now offers a full range of services, positioned as the

transformation partner of companies
Business Value
Business Consulting & System
Integration

Strategy & Change

Human Capital Solutions
Customer Relationship
Management
Financial Management
Supply Chain & Operations
Management
Infrastructure
and technical
services
Managed
Business Service
Outsource Management,
Operational and Support Proc.
Finance & Accounting
Human Resources
Procurement
Customer Care
Infrastructure
Servers
Web Hosting
Network
Desktop
Storage
Disaster Recovery
Security
Application Management
Services
Custom & Legacy
Packaged
Application Effectiveness
Rapid Development
Application Management Services

43
Case study 2: IBM
IBMs services transformation roadmap was multidimensional and took over a decade to execute
Key Milestones In IGS Evolution
Ensure
Leadership
Commitments
Launch Services
Organization
Develop
Offerings &
Capabilities
Close Large
Deals
Gerstner
Gerstner
commitment for
acknowledges OS/2
Open Standards,
is a lost battle,
services benefits
diverts investments
the most
D Welsh is
named President
of ISSC
IBM Spins off its
Systems Services
Division (SSD), into a
wholly owned
subsidiary ISSC
IBM Consulting
Group is started
as a unit within
Sales &
Distribution
Group
Vendor neutral
maintenance
contracts
Application
Development
Outsourcing
IBM Consulting
Group offers IT
planning
services
First American
National Bank, signs
first outsourcing
agreement
44
ISSC brand is
launched
IBM Consulting
Group offers
process
transformation
related services
Inks two dozen

10-year
agreement outsourcing contracts
with Hook- worth more than $2
SupeRx (HSI),billion (incl. Eastman
Kodak Co., Zale Corp.,
the retail
drugstore
and Continental)
chain
IBM Consulting
Group brand is
launched
D Welsh is
named
Group VP
of IGS
S Palmisano
is named
Group VP of
IGS
ISSC folded into IGS is organized into 3

IBM. New unit is BUs: SO, ITS and
Learning Services.
called IGS
Consulting is organized
by National Practices
Separate
Services Org
Product
Agnosticity
Strategic
Alliances/
Acquisition
Launch & Manage

Services Brand
Industry sales groups

created by adding
consulting group to the
sales force
IBM announces it is
pulling out of
business application
development market
IGS hires 15K

new employees
for past 2 years
in a row
S Palmisano is
named IBM
CEO
Services SVP
becomes CEO
Separates app
development from SO
and launches AMS; All
IGS BU are aligned by
industry
Creates BIS to
consolidate all
consulting
services, as a
fourth unit
under IGS
Morphs
BIS into
BCS with
PwCC
IBM India is Launches OnLaunches remote

monitoring & diagnostics launched, IBM Demand offering:
dissolves Tata Outsourcing of entire
services for network
business processes
monitoring- to offer 24X7 JV
support and counter
threats from low cost
Indian IT firms
United Health
AmEx signs Visteon signs a $2
Loss to EDS of the
Group chose IGS
$4BB
billion outsourcing
coveted multibillionand Synergy to
outsourcing deal with IGS
dollar Xerox Corp.
handle HR
deal
under the 10-year
deal
administrative
agreement
support for its
29,000 employees
Acquires
Acquires Mainspring, Acquires PwCC to
IGS forms
Lotus
brings expertise in
strategic alliances ChemSystems, a boutique strategy
acquisitions
areas like businessboutique
firm
with
SAP,
JDE,
creates channel
process outsourcing
Chemical &
Peoplesoft and
confusion with
and as well as
Petroleum
resellers in SMB Siebel.
industry-specific
strategy
firm
space
solutions
Launches IGS
Folds IBM
Launches BIS Morphs BIS
brand
Consulting
brand
brand into BCS
Group into IGS
business units
IBM Tata, a JV is
launched to
position IGS to
leverage Indian
resources
Sales Channel
Transformation
Large Scale 5
Acquisition
Case study 2: IBM
Services now contribute to over half of IBMs revenue, up

from only a quarter back in 1994
1994 IBM revenue structure
financing
5%
services
26%
software
18%
45
hardware
51%
2008 IBM revenue structure
software
22%
hardware
19%
financing
3%
services
56%
Case study 2: IBM
Summary of Gerstners Lessons Learned

I have worked in services companies
and product companies. I will state
unequivocally that services
businesses are much more
difficult to manage the skills
required in managing services
processes are very different the
business model is different. The
economics are entirely different.
This is the kind of capability you
simply cant acquire. The bet youre
really making is on your own
commitment to invest both the years
and capital, then build the experience
and discipline it takes to succeed
-Louis V. Gerstner,
Who Says Elephants Cant Dance
46
Key Messages
growth
experience
Chinese manufacturers need to address three key components to become
more service oriented: 1) differentiated business model 2) aligned
operational model, and 3) people & culture
47
Chinese companies transitioning to become more service oriented should

align three major components: business model, operating model, people &
culture
Business Model
Revenue model
Innovation
Industry model
Innovation
Processes
Governance
Model
Performance
Management
Systems
People & Culture
48
Training &
Development
Business model is the most

important part as it determines the
differentiating factor for success
Execution of the strategy requires

alignment of the key operational
elements considering processes,
governance model, performance
management and technology
Enterprise
model
Innovation
Operating Model
Organization
Structure
Culture
The foundation of a services centric

business is having the right people and
culture. This is enforced through right
organization structure, training and
development program, etc.
Business Model
Chinese manufacturers can consider different levers within three major

types of business model innovation
Industry model
Innovation
Asset transfer: Leverage
differentiating expertise/
experience/ assets (for
instance operational
excellence and unique
technology) to comparable
part of another industry or
customer
Direct to customer: Provide
services to customers more
effectively by removing
intermediaries, changing
role of players within
industry chain
Revenue Model
Innovation
Enterprise model
Innovation
Product/service bundling:
Bundle offerings to increase
value to customers by offering
attractive pricing (less than sum
of component products and
services)
Integrate the enterprise:

Enhance internal
collaboration by integrating
key processes and
operations to provide better
service to customers
Innovative pricing: Move

away from flat, free,
transactional based pricing by
adopting subscription, usage
based, value based pricing, etc
External collaborative
service network: Extend
sales and delivery service
capabilities by forming
partnerships and alliances
with multiple partners
Each lever is not mutually exclusive i.e. Chinese

companies can adopt and execute more than one to
achieve success
49
Business Model
Companies should consider its unique position when selecting the

appropriate strategic lever for its service strategy
Lever
When is it effective?
Asset Transfer
Possess strong brand, unique technology, management capabilities or

operational excellence that can be transferable
Direct to Customer
Existing channel partners lack ability or resources to execute service

strategy
Able to leverage new technology e.g. Internet to cut out intermediaries
Product/Service
Bundling
Have diverse offerings targeting same customer

More appropriate for companies offering value added services
Innovative Pricing
Offer customer flexibility while ensuring reliability in service; allows

variability in customer usage
Allows increasingly integration with customer needs (e.g. behavioral,
temporal, etc.), often used by services led solutions
Integrate the enterprise
Have multiple lines of businesses providing services and products to the

same customer
External collaborative
network
Lack of sufficient resources (for instance finances, sales or delivery human

resources) to sell and deliver new and existing customers efficiently
Need to access customer relationships and contacts to reach targeted
customer segments
50
Business Model: Revenue Innovation
Pricing services gets increasingly sophisticated as it

provides customers with greater flexibility and risk sharing
Value
Added
Services
Subscription
Increasingly complex and integrated with customers
Volume
Utility
Value
Services
Led
Solutions
51
Replace traditional pay per transaction by selling periodic use or

access to products and services. This ensures a steady base of
revenue over a longer period of time. For e.g. an engine
manufacturer charge airlines a flat fee for warranty or maintenance
services, billed on monthly/yearly basis
Charge customers based on unit number of transactions completed
during service. This model allows customers variability in usage while
ensuring reliability. For instance, the manufacturer will charge airlines
for servicing engine by the number of hours the engine is in the air
This pricing model also charges customers based on actual usage of
resources but it incorporates behavioral usage of customers.
Performance indicators might be incorporated into service contracts.
For e.g. the engine manufacturer charges the pricing of servicing the
engine based on how many hours the engine is in the air, with a
premium charge during peak hours and discount off if engine is not
fixed within 3 hrs
Charge customers based on value created by services rendered,
allowing risk and profit sharing, showing tight integration with and
commitment to customer. For e.g. engine manufacturer owns and
manages engine maintenance for airlines, charging airlines based on
percentage of costs saved in reduce maintenance costs
Business Model: Enterprise Innovation
Companies can enhance and extend their service capabilities by

forming and managing collaborative partnerships
Advantages of Partnering in Different Business Areas
A well executed partnership service

model should include how to:
Identify and recruit leading partners
Resolve possible channel conflicts
Maintain consistent level of service
quality
Define and agree on role and
responsibilities in interfacing with
customers
Train existing/new partners to align with
new service-led strategy
Incent/award high performing partner
performance
52
Product development
Enhance product and service offering
development using joint resources
Gain access and incorporate customer and
market insight from partners
Sales
Utilize partner sales force to expand customer
coverage
Cross sell related products and services,
strengthening product offering
Bundle products and services to meet
comprehensive customers needs
Service Delivery
Gain access to expanded delivery team to cover
wide geographical area more effectively
Gain access to lower costs resources to reduce
overall costs to customers
Gain access to specialized resources and
skillets not available in-house
Business Model: Industry + Revenue Innovation
Broad Air Con has used both industry and revenue

innovation as it moves to become a service provider
Industry innovation: Changed from air con vendor to temperature control
provider
- Broad gained success in China with the invention of the technically strong product,
the non-electric air conditioner which is more environmentally friendly than traditional
air conditioners. It gradually added maintenance and after sales services to better
service customers
- Broad realized its customers who own major residential or commercial complexes did
not want to own and maintain air conditioners
- Broad started to transition out of selling air con but instead now selling heat or cold
whereby customers outsource heating and cooling needs to Broad, eliminating
need for maintenance staff
Revenue innovation: Innovative pricing based on utility
- Instead of standard monthly subscription fees for maintenance charges, Broad now
charges customers heating and cooling services by square meter of space
- Deals typically tend to be for several years (e.g. 5 to 10 years) guaranteeing longer
term revenue
53
Operating Model
An effective service operational model should consider the key

elements required to execute the strategic plan
Strong executive sponsorship of

services with high visibility and
control
Flexible processes to allow

quick response to customer
needs
Integrated delivery organization to

manage across different business
units
Processes encourage
collaboration across company
Conflict resolution mechanisms to

address channel/ partner/ customer
conflicts
Define new and

appropriate measures for
instance services as a
percentage of revenue,
customer satisfaction
level, etc.
Performance
Measurements
Processes
Systems
Increase operation efficiency by

having
Integrated sales systems to

present consistent view of
customer
Information systems to
capture and share client
knowledge
Tools such as project

management systems to
support delivery
Link incentive systems to

performance metrics
Source: IBV Analysis, 2008

54
Governance
Model
People & Culture
As companies move to deliver more services, they need to consider

the major issues in developing and managing people
Product
Service
Key
Differentiator
Product and production technology
Skilled people to understand customer

painpoints and to successfully deliver
solution
Key Factors
for Customer
Satisfaction
Product features (e.g. design) and

quality
Skill sets of staff

Proper management of service
delivery
How to
Manage Costs
Production costs (e.g. cost of

goods, etc.)
Management of human resources

(number of people, level of expertise,
people utilization and delivery time)
Ways to
Increase
Productivity
Improve efficiency of production

process and facilities
Improve efficiency of delivery

personnel, which depends on
knowledge, experience and motivation
Required
Culture
Innovating the best product
Innovating to meet customers needs
Source: IBV Analysis, 2008

55
Are you ready to embark on services transformation?: The first step

is to assess the opportunity potential of services strategy
Objective
56
Assessment Questions
Confirm strategic
importance of services
To what degree can service provide a competitive advantage to the

firms overall success?
Assess opportunity
size of services
To what extent is there an opportunity to materially impact top line

growth with new services?
How can new services enhance customer value proposition and/or

enhance product ownership experience?
Are customers demanding these services or sourcing them from

competition?
If service market already exists, what is the size/potential and how

competitive is it currently?
Are customers willing to pay significant premiums or additional fee

for services separately?
Are you ready to embark on services transformation?: The second

step is to assess readiness of current business model
Objective
Evaluate ability to
execute business
model
Assessment Questions
How aligned is the services value proposition with the core enterprise business
strategy?

How differentiated and competitive is the defined services strategy?

To what extent have the risks of changing pricing models (for instance one off vs.
steady stream, etc.) been considered and managed?
If pursuing partnership approach, what type of experience and expertise in
partner identification and management exist currently?
Assess operational
readiness

Evaluate readiness
of people & culture

57
Can current channel (internal or partners) support desired sales and delivery of
services?
How integrated are the processes, data, tools, and management of he entire
service operations?
How well does current key performance indicators measure performance and
impact of services?
To what extent does current staff have the required skillsets to execute services
strategy?
What plans are in place to acquire new or train existing staff with the required
skillsets?
To what extent are current incentive systems aligned to promote effective selling
of services?

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IBM Global Business Services

Copyright IBM Corporation 2006

IBM Global Business Services

Michelle Kam, IBV China Research

Steven Davidson, AP S&C Leader

Copyright IBM Corporation 2006

IBM Global Business Services

Copyright IBM Corporation 2006

IBM Global Business Services

Copyright IBM Corporation 2006

IBM Global Business Services

Three factors drive Chinese manufacturers to transform from

Customers want better

Strong renminbi (RMB) and rise of

Lack of product differentiation

Copyright IBM Corporation 2006

IBM Global Business Services

Reductions in global and domestic demand from the current economic

Export orders has decreased

President of Wenzhou Association of

A recent survey by the China

Operating Revenue (RMB billion)

Copyright IBM Corporation 2006

IBM Global Business Services

Consumers are becoming more demanding, looking for more

Consumers are becoming more

Look for customized products tailored

Look for services along the full

For instance, an Ipod is not just a cellphone. It

Look for total solution services

For instance, consumers look for companies to

Copyright IBM Corporation 2006

IBM Global Business Services

Commoditized products offer minimal product differentiation,

The commoditization of device is increasing and getting worse

Poor value proposition

Note: Spreadtrum and Hitech Wealth are local handset manufacturers

Copyright IBM Corporation 2006

IBM Global Business Services

Global players are ahead of Chinese manufacturers, having started

real value for its customers

Copyright IBM Corporation 2006

IBM Global Business Services

Compared to peers globally, Chinese manufacturers have much

Copyright IBM Corporation 2006

IBM Global Business Services

Copyright IBM Corporation 2006

IBM Global Business Services

Transforming from product to service centric requires fundamental

Sell services in addition to product, or sell

Must have services

Innovative and differentiated service

One-off transaction and revenue

Long term, continuous revenue stream

Compete on price, product features

Compete on service innovation/ quality in

A partial view to meet customers

Have a holistic view to meet customers

Limited customer interaction once the

Greater customer intimacy as interact

Source: IBV analysis, 2008

Copyright IBM Corporation 2006

IBM Global Business Services

Product related value added